Nidec Says Buyouts to Help Boost Revenue, Achieve Margin Target

By Mariko Yasu -
Sep 20, 2012

Nidec Corp. (6594), a Japanese maker of
small precision motors, will use acquisitions to boost revenue
and improve operating margin, the company’s chief executive said.

The acquisition of two U.S.-based companies announced today
will help increase sales in the appliance, commercial and
industrial-motor segment to 300 billion yen ($3.8 billion) in
year ending March 2016, from 124 billion yen in year ended in
March, Chief Executive Officer Shigenobu Nagamori told reporters
in Tokyo today. The company can achieve 15 percent operating
margin for the segment that year, he said without elaborating.

Nidec agreed to buy Deerfield, Illinois-based Kinetek Group
Inc. from the Resolute Fund LP, and Ohio-based Avtron Industrial
Automation Inc. from Morgenthaler, it said in a statement. The
acquisitions are aimed at boosting the commercial motor business,
helping the division expand sales to 230 billion yen in the 12
months through March 2014, according to the Kyoto-based
company’s statement.

Motors used in home appliances such as washers have been
“pressuring the margin of ACIM segment,” Nagamori said. By
shifting toward commercial appliances such as elevators and
aerial lifts, the company can lower the reliance on business for
home goods, he said.

The purchase of Kinetek, a maker of custom-engineered
motors and elevator control products, is expected to be
completed in November, and that of Avtron, a provider of control
and automation systems for heavy industries, this month, the
Japanese company said. Both acquisitions are subject to
regulatory approval, Nidec said, without giving figures for the
cash transactions.

Nidec fell 1.2 percent to close at 5,810 yen in Osaka
trading after the announcement of the acquisitions, extending
its loss this year to 13 percent.